Alta best practices
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ALTA Best Practices. Changes in Regulatory Scrutiny. Dramatic increase in regulation and scrutiny– 3 rd party service providers: 2001 – OCC guidance on 3 rd party service providers 2006 FDIC guidance on 3 rd party service providers

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ALTA Best Practices

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Alta best practices

ALTA Best Practices


Changes in regulatory scrutiny

Changes in Regulatory Scrutiny

  • Dramatic increase in regulation and scrutiny– 3rd party service providers:

    • 2001 – OCC guidance on 3rd party service providers

    • 2006 FDIC guidance on 3rd party service providers

    • 2011 Formal enforcement action requiring lenders to improve oversight of 3rd party service providers


2011 formal enforcement action

2011 Formal Enforcement Action

Foreclosure Weaknesses:

Inadequate policies and procedures;

Inadequate monitoring and controls;

Lack of sufficient audit trails;

Inadequate quality controls;

Inadequate identification of risks;

Inadequate staffing; and

Discrepancy of fees charged.


Changes in regulatory scrutiny1

Changes in Regulatory Scrutiny

  • Dodd Frank

  • CFPB

    1. American Express - $85 million

    2. Discover - $200 million

    3. Capital One - $210 million

  • NAIC

  • Market conduct examinations

  • Bar Examiners and random audits


Changes in regulatory scrutiny2

Changes in Regulatory Scrutiny

  • CFPB Bulletin 2012-03

    • “Legal responsibility may lie with the supervised bank...as well as...service provider.”

  • Standard

    • Due diligence

    • Lender must produce proof of review of a service provider’s policies

    • Lender must express clear guidance as to compliance

    • Lenders must demonstrate prompt action for service provider missteps


Lender response to the regulatory changes

Lender Response to the Regulatory Changes

  • National lender contacts title underwriters—minimum standards for title underwriter oversight

  • Annual background checks

  • Annual credit checks

  • Escrow controls

  • Policy inventory controls

  • Underwriter audit of agents

  • Operational oversight of agents

  • Agent Vetting Company

  • ICL on steroids


Alta response to market demands

ALTA Response to Market Demands

  • Establish and maintain current licenses

  • Adopt and maintain appropriate written procedures and controls for IOLTA accounts

    • Safeguard clients funds

    • Reconcile receipts and disbursements on a daily basis

    • 3-way reconciliation once a month

    • Segregation of duties

    • Authority to access and transfer funds

    • Employee background and credit checks


Alta response to market demands1

ALTA Response to Market Demands

  • Adopt and maintain a written privacy and information security plan

    • Physical security of non-public information

    • Network security of non-public information

    • Proper disposal of non-public information

    • Disaster management plan

    • Oversight of service providers

    • Audit and oversight to ensure compliance


Alta response to market demands2

ALTA Response to Market Demands

  • Adopt standard real estate settlement procedures and policies that ensure compliance with federal and state laws

    • Submit Documents for recording within 2 days of closing

    • Procedures to ensure consumers

      are charged established rates

      3.Post closing quality check


Alta response to market demands3

ALTA Response to Market Demands

  • Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance

    • Policies Delivered within 30 days of closing

    • Premium reporting and remittance by last day of month after closing


Alta response to market demands4

ALTA Response to Market Demands

  • Maintain appropriate professional liability insurance and fidelity coverage

    • Professional E and O

    • Fidelity coverage – when required by state law or contractual obligations

    • Surety coverage– when required by state law or contractual obligations


Alta response to market demands5

ALTA Response to Market Demands

  • Adopt and maintain procedures for resolving consumer complaints

    • Procedures for logging and resolving consumer complaints

    • Single point of contact

    • Complaint log


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